TSIVINSKY v TSIVINSKY SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KIRBY P, MAHONEY and PRIESTLEY JJA 12 November 1991, 5 December 1991 [1991] NSWCA 269 TESTATORS FAMILY MAINTENANCE — family provision — will gives all to son — claim by grandchildren — "eligibility" — factors warranting application — proper tests — whether order ought to have been made — need for mediation. — held: (by the Court) (1) The grandchildren were "eligible persons" within s8(1), definition (d) of the Act; (2) In the peculiar facts of the case, including the residence of each grandchild with the deceased for various particular times during infancy and childhood and their established needs there were factors warranting the making of their applications. Re Fulop, Deceased (1987) 8 NSWLR 679; Churton vy Christian and Ors (1988) 13 NSWLR 241 (CA) applied; (3) Proof of eligibility and of factors warranting an application did not of themselves require the making of an order under the Act. Benney v Jones, Court of Appeal, unreported, 18 June 1991 applied; (4) In determining what order, if any, ought to be made under s7 of the Act is necessary, amongst other things, for the Court to (a) take into account the size of the estate available for distribution; and (b) take into account the principle that the will should be disturbed only to the extent necessary to give effect to the provisions of the Act; (5) (per Kirby P) The orders of the trial judge (Hodgson J) providing legacies to the grand-daughter of $96, 000 and to the grandson of $48,000 in an estate of $420,000 sufficiently revealed error in the exercise of the discretion provided by the Act as to permit the setting aside of those orders; (per Mahoney JA) The order for the grandson revealed error; (per Priestley JA) No error was shown; (6) (Kirby P agreeing with Priestley JA to secure an order of the Court) Appeal dismissed with costs. LAW REFORM — family provision — practice and procedure mediation — observations by Kirby P on the need for mediation of such disputes to reduce costs. Hemmes Hermitage Pty Limited y Abdurahman and Anor (1991) 22 NSWLR 343, 351 (CA) referred to. PRACTICE and PROCEDURE — Court of Appeal — order — securing order where judges differ — proper approach to — Woolworths Australia Limited v Kelly (1991) 22 NSWLR 189, 200 (CA) applied. WORDS and PHRASES — "ought". Courts (Mediation and Arbitration) Act 1991 Family Law Act 1975 (Cth) Family Provision Act 1982, s6(1), s7, s9(1), s9(2), s9(3). Testators' Family Maintenance and Guardianship of Infants Act 1916. Kirby P This appeal concerns challenges to orders made under the Family Provision Act 1982 (the Act). Involved in the appeal are questions concerning the proper approach to claims under the Act and the proper function of this Court in appeals against discretionary orders made under the Act. In the resulting division of opinion within the Court it is also necessary to consider the course which should be adopted to secure an order disposing of the appeal. The course of the proceedings The appeal comes from Hodgson J in the Equity Division of the Supreme Court. His Honour's orders were made in his determination of three applications brought under the Act. The applications related to the estate of the late Mrs Vera Tsivinsky (the deceased). By her will of 19 June 1986, the deceased left all her real and personal property to her only remaining child, her son, Mr Alexander Tsivinsky (the appellant). He was also named the sole executor and trustee of the 2 UNREPORTED JUDGMENTS will. Contending that they were "eligible persons" for whom no provision had been made out of the estate of the deceased, her widower, Mr Igor Tsivinsky, her grand-daughter, Mrs Maria Tsivinsky and her grandson Mr John Morgan, by their respective tutors, brought proceedings seeking orders under the Act. An interim order in favour of Ms Maria Tsivinsky was made by Young J in October 1988. In May 1989, in the first hearing, Hodgson J made final orders. He ordered, in effect, that Ms Tsivinsky receive a legacy of $120,000 from the deceased's estate and that Mr Morgan receive $60,000 by way of legacy. He dismissed the claim by the widower, Mr Igor Tsivinsky, holding that his needs could be satisfied by realizing the one-third share he enjoyed in the matrimonial home in Brady Street, Croydon where he had lived with the deceased. Before judgment upon the foregoing orders was entered, the appellant, by motion, sought reconsideration of the orders in the light of a proffered tender of fresh evidence. From this evidence, it was suggested that the value of the real property brought into the estate had diminished, warranting a diminution in the legacies ordered in favour of Ms Tsivinsky and Mr Morgan. On 23 May 1989, Hodgson J permitted the reopening of the evidence. A further hearing of evidence ensued. On 2 November 1989, his Honour varied his earlier orders, reducing the legacies which he had ordered. The legacy in favour of Ms Tsivinsky was reduced to $96,000. That ordered in favour of Mr Morgan was reduced to $48,000. It is from those orders, as varied, that the appellant has appealed. It was his case that the Court was entitled to set aside the orders of Hodgson J because, although discretionary in character, they were affected by legal errors. Those errors were that: 1. His Honour had failed to apply correctly the provisions of the Act in considering the respective claims made under it by Ms Tsivinsky and Mr Morgan at the various "gateways" provided by the Act for the consideration of such claims; and, alternatively 2. That the orders finally made evidenced a manifestly unreasonable determination of the respective entitlements of Ms Tsivinsky and Mr Morgan, when compared with the needs of the appellant, recognised by the deceased in the provision which she made by her will. If it was not possible to point precisely to the error of approach or principle in the exercise of the discretion, the result arrived at by his Honour was so clearly unjust that it authorised the intervention of this Court. At first instance, the three separate claims were, for convenience, heard together. From the final orders made by Hodgson J, a single appeal has been brought by the appellant as executor and sole beneficiary under the will. No appeal was brought during his lifetime by Mr Igor Tsivinsky against the order disposing of his claim. Like the deceased, Mr Igor Tsivinsky, father of the appellant, spent his last years in a nursing home. On 20 September 1990, before the hearing of the appeal, Mr Igor Tsivinsky died. At first instance he had been represented by a tutor appointed by the Protective Commissioner of New South Wales. At the outset of the hearing of the appeal, and with the consent of the parties, an affidavit by an officer of the Protective Commissioner deposing to the death of Mr Igor Tsivinsky was read. The affidavit states that no will appears to have been left by Mr Igor Tsivinsky and that the amount remaining in trust to his credit at his death amounted to $61,569.56. Following this suggestion of the death of Mr Igor Tsivinsky (the second respondent), the Court ordered that its record should be amended to delete his name. If, as appears likely, the assets remaining in his estate are administered as URJ TSIVINSKY v TSIVINSKY (Kirby P) 3 on an intestacy pursuant to the Wills, Probate and Administration Act 1898, the appellant as the sole remaining child of Mr Igor Tsivinsky will take half of the assets. Ms Maria Tsivinsky and Mr John Morgan as his surviving grandchildren will take a quarter each. However, these are developments which have occurred since the orders under appeal. The respondents to the appeal insisted, correctly as I believe, that the threshold question before this Court had to be determined strictly upon the evidence as it was before Hodgson J in November 1989, unless the Court enlarged that evidence with the consent of the parties or by order made on special ground. See Supreme Court Act 1970, s75A(8). No application was made to enlarge the record. Accordingly, the complaints of the appellant must be judged in the light of the facts before Hodgson J when he made his final orders in November 1989 which are the subject of the appeal. Unusual family arrangements About the raw facts of the relationship between the parties to the appeal, there was little dispute. The deceased and Mr Igor Tsivinsky were White Russians. They married in Harbin, China in 1941. The appellant, their only son, was born in 1942. Their daughter, Anna, was born in 1948. The family migrated to Australia in 1956 and took up residence at the family home in Brady Street, Croydon. The appellant took degrees in Engineering from the University of New South Wales in the 1960s. Later he went on an extended holiday to Europe where he married a Polish woman whom he was unable to bring back to Australia for reasons not fully explained. He later lost touch with his wife. Soon after his return to Australia in 1972 he became unemployed. Later, in 1978, he was granted an invalid pension which he still receives. He was not certain as to why he had received the pension or why he had been unable to obtain remunerative work. Various dark suggestions were made. However, these are beside the point. He lived in the family home. The deceased, an enterprising secretary who acquired real property assets, would certainly have known of her son's position when she made her will in 1986, six months before she died in March 1987. The daughter, Anna Tsivinsky underwent training at a teacher's college in Sydney. However, by 1966 she was suffering from severe depression and spending extended periods in mental hospitals. This position continued during the late 1960s and early 1970s. In 1971 Ms Anna Tsivinsky gave birth to Ms Maria Tsivinsky, the first respondent. The pregnancy arose following a brief relationship. After still further periods as a patient in a mental hospital, in April 1975 Ms Anna Tsivinsky met and commenced living with Mr Sabri Morgan. As a result of their association, Mr John Morgan was born in March 1986. Five days after his birth Mr Sabri Morgan married Ms Anna Tsivinsky in a hospital ceremony. Some two months later, Anna Tsivinsky died of cancer, aged 28 years. During various times in her early infancy and when her mother was being intermittently cared for in mental hospitals, Ms Maria Tsivinsky resided at Brady Street with her grandparents. When her mother commenced living with Mr Morgan, she accompanied her into that relationship. But following her mother's death, Ms Maria Tsivinsky and Mr John Morgan came into the custody of their grandparents, the deceased and Mr Igor Tsivinsky. They were then aged 5 years and 7 months respectively. The two children lived together with their grandparents at the Brady Street home until January 1981. By that time, Mr Sabri Morgan had remarried. He applied for custody of both children. However, he obtained custody only of his son John, who was then 4 years 10 months old. Ms Maria Tsivinsky continued to live with her grandparents. She would presumably 4 UNREPORTED JUDGMENTS have remained with them until adulthood. However, in late 1983, the deceased suffered a cerebral catastrophe. Ms Maria Tsivinsky, then aged 12 years, left the home at Brady Street and commenced living with the family of a school friend. This arrangement endured for three months. In 1984 she commenced to reside with the Ostin family. She remained with them until August 1988 when she moved in with the Demidov family where she was when the present proceedings began. Meanwhile, the deceased in 1984 was herself admitted to a psychiatric hospital. Until the date of her death, her affairs were managed by the Protective Commissioner. It was while her affairs were so managed that she made the subject will. No question has arisen as to her capacity to make the will or as to its validity. I have read Priestley JA' observations about the circumstances in which the will was made. This was not an issue litigated at the trial, nor argued by any party to the appeal. With respect, I do not believe that it is a consideration proper to the determination of the appeal. The deceased's husband followed her into the same hospital. His affairs also came to be managed by the Protective Commissioner. However, he survived the deceased by more than four years. He was still alive when the proceedings under the Act were commenced. Eligibility and factors warranting an application Hodgson J found that Ms Maria Tsivinsky was an "eligible person", competent to make an application for an order under the Act. He held that, in all the circumstances of the case, there were factors which warranted the making of the application. He then proceeded to make the order, ultimately, of $96,000 in her favour. Before his Honour, it was conceded by counsel then appearing for the appellant that Ms Maria Tsivinsky was an eligible person; that there were factors warranting the making of the application in her case; and that an order might be made under the Act for such provision as in the opinion of the court ought to have been made in the will for the maintenance, education and advancement in life of Ms Maria Tsivinsky. Upon the basis of these concessions, which were not withdrawn in the appeal (even if they could properly have been) it would appear that the only question for this Court in her case is whether the amount allowed by his Honour was so inappropriate to the evidence as to authorise and invite disturbance by this Court. The position of Mr John Morgan was somewhat different. Neither at trial nor in this Court was it conceded that he was an "eligible person". It was also contested that there were factors which warranted the making of his application. And it was asserted that, even if he was able to make out eligibility and escape the disqualification for want of factors warranting his application, no such order should have been made in his favour, either as Hodgson J ultimately provided, or at all. The somewhat clumsy and opaque language of the Act has been commented upon in numerous decisions at first instance and in this Court. See eg Difkhuifs v Barclay (1988) 13 NSWLR 639, 653 (CA). There are various difficulties. The precise meaning of some of the terms in the definition of "eligible person" in s6(1) of the Act has been controversial. The meaning of the provisions of s9(1) of the Act is not at all plain. What the "factors" are which "warrant the making of the application" is left to judicial assessment without express statutory guidance. The procedure to be followed under s9(1), as a mechanism for early dismissal of claims by certain categories of "eligible persons", has also been a matter of controversy. The provisions of s9(1) bear all the hallmarks of the URJ TSIVINSKY v TSIVINSKY (Kirby P) 5 origins of the subsection. It was inserted in the Bill as it was passing through the legislature. It was not a provision contained in the report and recommendations of the Law Reform Commission upon which the Act is generally based. Insofar as s9(1) gives any guidance concerning the factors" which warrant the making of the application", it is Delphic. The language used is extremely broad in its generality (all the circumstances'), 'whether past or present", ''factors... warrant making the application", satisfies"). The only real clue as to what is meant is to be derived from the apparent policy of confining this additional, preliminary procedure to the particular categories of eligible person" contained in the definition paragraphs (c) and (d) in s6(1) of the Act. As McLelland J observed in In re Fulop, Deceased (1987) 8 NSWLR 679, 681 this differentiation suggests: "That those classes of applicants need to demonstrate some basis for their claim additional to that required of other classes." Further difficulties are encountered as the journey through the statute continues. Where the applicants are, as here, persons in the classes mentioned in the paragraphs which attract the procedure laid down by s9(1), and where they satisfy the Court that there are "factors" which warrant the making of their applications, the power to make an order under s7 is enlivened. Yet that power could also scarcely be expressed in words of greater generality: "Subject to s9... if the Court is satisfied that a person is on eligible person, it may order that such provision be made out of the estate... of the deceased person as, in the opinion of the Court ought, having regard to the circumstances at the time the order is made, to be made for the maintenance, education or advancement in life of the eligible person." The reservation of s9 takes the Court not only to the special procedure laid down as relevant to a case such as the present in s9(1). It also directs attention to further disqualifications provided in s9(2) and to the considerations to be taken into account in determining what provision (if any) ought to be made in favour of an eligible person. See s9(3). Nowhere does the Act expressly state that, in determining what provision, if any, ought to be made the needs (sometimes expressed as "moral claims'') of persons for whom provision is made in the will must also be taken into account. Cf Lloyd v Nelson (1985) 2 NSWLR 291, 298 (SC); Gorton v Parks (1989) 17 NSWLR 1, 10 (SC). It is possible that those claims, in competition with the claims of "eligible persons" under the Act, are expressly contemplated by s9(3)(c) and s9(3)(d) of the Act. It is also possible that the obligation to take such claims into account emerges sufficiently from the scheme of the Act permitting the Court to disturb what is otherwise the right of the testator to dispose of his or her property as he or she thinks fit. The casebooks are full of pious homilies by the courts, considering both the Act and its predecessor (the Testators Family Maintenance and Guardianship of Infants Act, 1916). See eg White v Barron (1980) 144 CLR 423, 434 and; Hunter v Hunter (1987) 8 NSWLR 573, 576 (CA). Repeatedly it is said that the Court should disturb the provisions of the will only to the extent necessary to achieve the beneficial and protective objects of the legislation. It is not necessary in this case to explore that issue further. None of the parties before the Court contested that it was the duty of the primary judge, having found eligibility and being satisfied that there were factors warranting the applications, to consider the competing claim of the appellant on the deceased's estate when judging what provision (if any) ought to be made in favour of the grandchildren, Ms Tsivinsky and Mr Morgan. I will approach the consideration of Hodgson J's treatment of their respective claims assuming (as his Honour appears also to have 6 UNREPORTED JUDGMENTS assumed) that the extent of what "ought" to be ordered out of the estate in their favour could only be decided when what "ought" to have been provided to the appellant was also taken into account. The foregoing approach involves taking three steps in a case such as the present: 1. Determining whether the applicants are "eligible persons" within s6(1) of the Act; 2. Determining in the case, relevantly, of grandchildren, whether the Court is satisfied that there are factors which warrant the making of the application within s9(1) of the Act; and 3. Determining whether an order ought be made under s7 of the Act for provision out of the estate and, in so doing, taking into consideration the matters referred to in s9(3) of the Act. This is the approach which has been approved and applied in a series of decisions of this Court after the commencement of the Act. See eg Churton v Christian and Ors (1988) 13 NSWLR 241 (CA): Ball v Newey (1988) 13 NSWLR 489; Benney v Jones, Court of Appeal, unreported, 18 June 1991. Eligibility and dependency The appellant, however, contended that there were two basic errors of law in the approach which Hodgson J took in reaching the orders now challenged. The first error alleged was that his Honour determined that Mr John Morgan was an "eligible person" without sufficiently attending to the applicable definition. It was argued that the definition required that it should be established that the applicant was dependant on the deceased person. Unless such dependency could be shown, the mere face that he or she was a grandchild would not warrant the determination of eligibility to make a claim under the Act. The relevant provision in the definition of "eligible person" in s6(1) is to be found in para (d): '"' Eligible person', in relation to a deceased person, means (d) A person - (i) who was, at any particular time, wholly or partly dependant upon the deceased person; and (ii) who is a grandchild of the deceased person or was at; that particular time or at any other time, a member of a household of which the deceased person was a member." These submissions are misconceived. As the definition makes plain, it is not necessary for (relevantly) a grandchild of the deceased person to prove that he or she was, at the time of the will at the time of the death of the deceased or at any other specified time, 'wholly or partly dependent upon the deceased person". It is enough that it should be shown that the person was so wholly or partly dependant: "....at any particular time." This approach to the definition is reinforced by the provisions of s6(1)(d)(ii) which follow, cumulatively, upon the requirement of the proof of dependency. If a person is a grandchild of the deceased person, that is enough. But, in addition, a "member of a household of which the deceased person was a member" may claim if he or she can show a total or partial dependency upon the deceased person and, at that time of dependency or at any other particular time, he or she has been a member of the household of which the deceased person was a member. The necessity to demonstrate total or partial dependency upon the deceased person at the time of death is contradicted by the express provisions of URJ TSIVINSKY v TSIVINSKY (Kirby P) 7 the definition. It is enough, in the case of a grandchild, that at any particular time, ie before the death of the deceased, he or she was "wholly or partly dependent" upon the deceased person. This is what the words used by Parliament mean. It is the approach which was intended by the Law Reform Commission, as its report demonstrates. It is a wholly sensible approach because all that is being determined, at this stage, is the question of eligibility. As Mahoney JA pointed out in Benney v Jones, the demonstration that a person is an "eligible person" does not mean that the deceased had a duty to provide for him. That duty is only determined at a later stage of the application of the Act. See also Dijkhuijs (above), 654; Re Fulop (above), 681; and Johnston v Johnston (1987) 11 NSWLR 38, 44(SC). Proceedings under the Act may only be determined affirmatively if the eligible person, being a grandchild, gets through the gateway provided by s9(1) and, having regard, amongst other things, to the terms of s9(3) enlivens the making of an order by the Court under s7. To establish eligibility, it is enough that some period of entire or partial dependency upon the deceased person should be shown at some particular time. When the facts of this case are examined it is plain that for both of the grandchildren, there was such a period. In the case of Mr John Morgan the period terminated when he went to live with his father in January 1981. But that period is sufficient to establish eligibility. Accordingly, the first requirement for the claim under the Act is made out. The appellant's contention to the contrary in the case of Mr John Morgan must be dismissed. No such argument was advanced in the case of Ms Maria Tsivinsky, having regard to the concession made at trial. Factors warranting making of the application It was then argued that there were no "factors" upon which it would have been open to Hodgson J to decide that the making of the applications under the Act were "warranted". This submission was originally advanced in respect of each of the grandchildren. But as at the trial it had been conceded that there were such "factors" in the case of Ms Maria Tsivinsky, I do not believe that the Court should permit the issue to be reopened on appeal in her case. In any event, even apart from the concession, there were clearly "factors" in the evidence in this case of the kind to warrant the making of each application as such factors are explained by McLelland J in Re Frulop (above) and by this Court in Churton v Christian and Ors (1988) 13 NSWLR 241, 252. Even if grandchildren are not "generally regarded as natural objects of testamentary recognition by a deceased" testator, no that additional "factors" must be shown in each case to lift them into the class of persons for whom disposition "ought" to be made, there were "factors" in this case which made the application by Ms Maria Tsivinsky warranted and thus authorised the making of an order under the Act. Those factors included the loss of her mother at an early age, her residence with the deceased in her home both before and after the mother's death; the acceptance by the deceased, particularly after the death of her daughter, of a position of surrogate mother to Ms Tsivinsky and the continuance of that relationship until a stroke rendered the deceased unable to continue in that role. During the most important formative years of her childhood, the deceased's grand-daughter was wholly dependent upon her. At the time of the deceased's death, Ms Tsivinsky was fifteen years of age. No provision was made in the deceased's will for her proper maintenance, education and advancement, although she would obviously continue to have needs for her schooling and later education. This was therefore no ordinary or typical grandchild. Nor was the 8 UNREPORTED JUDGMENTS relationship to the deceased one with only short and interrupted periods of dependency. It was a case of substantial dependency in the past and forseeable needs in the future. Hodgson J's determination that he was satisfied that there were factors warranting the making of the application on the part of Ms Tsivinsky was clearly correct. As his Honour pointed out, the application on behalf of Mr John Morgan was "not quite so clear'. But his Honour concluded that there were factors warranting the making of the application in his case with these words: "John's mother is deceased the deceased was substantially in the position of his parent during the years 1976 to 1981. Although he has his father to support him and he is now living with his father, his father has remarried and there are three children of this new marriage and that family is in a marriage economic situation I think all those factors, taken together, do amount to the necessary factors within s9(1)." In my opinion that conclusion was open to Hodgson J in the facts of this somewhat peculiar family history. Certainly, no such error has been made in that finding as would warrant disturbing his Honour's conclusion that the requirements of s9(1) of the Act were satisfied in the case of both grandchildren. Challenge to the provision made: unreasonable consequences This brings me to the final challenge which was to the amounts eventually ordered by Hodgson J under the Act in favour of Ms Tsivinsky ($96,000) and Mr Morgan ($48,000). Counsel for the appellant contended that the amounts provided for the suggested "needs" of the grandchildren was excessive, in each case. He urged that no order should have been made under the Act in favour of Mr Morgan and that the amount provided by the order in favour of Ms Tsivinsky was much more than was necessary to repair the inadequacies of the will in failing to provide for her "proper maintenance, education and advancement in life" as s9(2) of the Act contemplates. Counsel drew attention to the omission of "proper" and the substitution of "or" for "and" for this time-honoured trinity of necessities in s7 of the Act. Cf White v Barron (above), 434f; Hunter v Hunter (above),575. However, at least in the present case of young persons such as the grandchildren, I do not believe that anything turns on these statutory niceties. The issue is what the Court "ought" to have ordered out of the estate of the deceased person for the purposes specified. It is necessary to compare the several claims and to keep in mind the limited size of the estate which is available to be distributed as the Court thinks the testatrix "ought" to have done. In his written argument, counsel for the appellant suggested that the nett result of the final orders of Hodgson J were as follows. The total value of the estate was $323,864. The provisions to be deducted for the respective entitlements of the grandchildren and of the late Mr Igor Tsivinsky, together with costs of the proceedings, amounted to $257, 745. This would leave a residue for the appellant of $66,119. In comparison with the sums ordered for the grand-children (aggregating to $144,000) the orders would grossly disturb the provisions of the will. But they would also leave the appellant, an invalid pensioner, with less by way of ultimate "provision" than either of the grandchildren had received. As he was virtually unemployable and, not able to finance a mortgage on his home at Brady Street, he would be forced to sell his home of many years, contrary to the plain intention of the deceased and his own desire. On the face of things, if these figures were accepted, they would seem to call out for reconsideration. URJ TSIVINSKY v TSIVINSKY (Kirby P) 9 The respondents to the appeal, however, contested numerous items in the figures upon which the appellant relied to support his argument. When examined, it appears that the figures contain items which were contested or which were not proved before Hodgson J nor proved, by the leave of the Court, with fresh evidence admitted in the appeal. Thus the claim that the costs of the proceedings to date amount of $103,963 was contested by the respondents. The valuation of the Brady Street property upon which the appellant relied ($170, 000) was certainly different from that which Hodgson J finally accepted, with the concurrence of all parties, when the proceedings went back to him for reconsideration of his original orders. On that occasion, the valuation of Brady Street which was accepted was $210,000. The proper way to test the suggested unreasonableness of the orders made by Hodgson J is to consider them against the evidence which was before his Honour when the orders were made. According to that evidence, the following (expressed in general terms) were the assets and liabilities of the estate of the deceased: ASSETS AND LIABILITIES OF THE ESTATE (APPROX) $ $ Valuation of the investment property at Kenilworth Street, Croydon At first trial 320,000 As accepted for final orders 280,000 Valuation of property at Brady Street, Croydon At first trial 240,000 As accepted for final orders 210,000 Less: One-third interest of Mr Igor Tsivinsky 70,000 140,000 Cash etc 1,000 Total: 421,000 Less: Costs Accepted at the trial 53,000 Conceded for the purposes of the appeal 65,000 Legacy for Ms Maria Tsivinsky 96,000 Legacy for Mr John Morgan 48,000 Total: 209,000 Residue of the estate to the appellant 212,000 The above figures were the subject of many conflicting submissions. At once stage it was suggested that the value of Brady Street, in its entirety, should be brought into the estate of the deceased. However, this does not appear to be appropriate. The late Mr Igor Tsivinsky always retained a one-third interest in that property. He sold that interest to the appellant and received A cash sum which is now, substantially, the whole of his estate, awaiting distribution, apparently as of an intestacy. But as that interest was never part of the deceased's property to distribute on her death, it is not appropriate to bring it into her estate for the purpose of considering the distribution which "ought" to be made to the "eligible persons" claiming against that estate under s7 of the Act. The claims on 10 UNREPORTED JUDGMENTS the late Mr Igor Tsivinsky's estate will have to be determined separately from these proceedings, seemingly pursuant to the provisions of the Wills, Probate and Administration Act. The result of the foregoing distribution is clearly very different from that which the deceased testatrix intended in her will. Instead of her only son receiving the entirety of the estate available for distribution, he would receive almost exactly half of it. In fact, the distribution would be as follows: DISTRIBUTION OF ESTATE (APPROX) $ % Mr Alexander Tsivinsky 212,000 49.0 Ms Maria Tsivinsky 96,000 24.0 Mr John Morgan 48,000 11.5 Costs (as conceded) 65,000 15.5 TOTAL 418,000 It would seem likely, as a consequence of the confirmation of Hodgson J's orders, that the appellant would have to sell the Brady Street property. Doubtless this would cause him dislocation and inconvenience. On the other hand, the property obviously has a number of bedrooms surplus to his needs. Finding an alternative property would be particularly difficult for him because his income appears likely to be confined to that of an invalid pensioner. In effect, he would therefore have to fund the property entirely from the residual capital. That capital would doubtless, in turn, be reduced by cost orders to be made in the appeal. The possibility that the cost orders of the trial are greater than the $65,000 allowed by the respondents upon the available evidence, may not be discounted. The issue is not whether I would have made the orders which Hodgson J made on the foregoing evidence. It is whether, having regard to established principle, I am authorised in this Court to give effect to my opinion that a different distribution ought to have been made. Hodgson J explained the order made for Ms Tsivinsky in this way: "I think that adequate provision for Maria's proper maintenance would be provided by a sum which would provide adequately for her for the next four or five years and give her a capital sum for contingencies and perhaps give her a further capital sum to assist in her start in life after she has finished her education. If she is to provide for accommodation or rent as will as meeting the other expenses which have been outlined, it may be that she will need something of the order of $20,000 for the next four or five years plus, as I have suggested, a further sum for contingencies and to five her a start in life." This reasoning led his Honour to the order originally made of $120,000, which was reduced by one-fifth to $96,000 upon proof of the reduction in the value of the realty. In the case of Mr Morgan, Hodgson J said: "As regards John, in my view the moral duty arising out of the relationship is substantially less in his case, for the reasons which have already been looked at; in particular the circumstance that he has had that he has his father to support him and that from the age of about five has been in the care of his father and not in the care of or dependent in any way on the deceased. On the other hand his position in life is in many respects less favourable than that of Maria's, and to some extent that hints to a substantial order in his favour. On the whole, in my view, the appropriate order in favour of John would be $60,000." This sum was likewise reduced to $48,000. URJ TSIVINSKY v TSIVINSKY (Kirby P) 11 Conclusion: orders involved excessive disturbance of will I have come to the conclusion that, upon the evidence which was before Hodgson J, the disturbance of the testator's disposition was greater than ought to have occurred in the size of the estate and competing claims. Cf White v Barron (1979) 144 CLR 431, 444. The orders made were manifestly beyond what ought, having regard to the circumstances at the time the orders were made, to have been made for the maintenance, education or advancement in life of the grandchildren. As was conceded for the grandchildren, properly I believe, the provision which ought to have been made for them could only be decided keeping in mind the total size of the estate, less the cost of the litigation and the competing claim which the testatrix acknowledged on the part of her son. He was, after all, her only living progeny. He was in a special class, as Parliament itself acknowledges in the differential definition provided for "eligible person" in s6(1) and the differential procedure established by s9(1). He was an invalid pensioner. For twenty years he had been unemployed. He was virtually unemployable. He had lived in the family home for most of his adult life. The need to provide for him was great, even compelling. There was also a need to provide for Ms Tsivinsky. And, to a far lesser extent, for Mr Morgan. Even if provision ought to have been made for the grandchildren, any such provision would have to be adjusted to the competing and paramount need to provide for the maintenance in life of the appellant, given his particular predicament. With every respect to Hodgson J, I do not consider that his Honour gave adequate attention to the limits within which the determination of the provision to be made out of the estate for the grandchildren had to be decided. The case is a borderline one. I am conscious of the undesirability of encouraging appeals in this class of case by orders which tinker with those made at trial in such matters. But in my view the disturbance of the will in this case, by the orders made, went beyond that which the Act permitted and the circumstances required. The basic error which I detect in the reasons of Hodgson J is that his Honour did not sufficiently appreciate the greater need of the appellant (which had been appreciated by the deceased); did not give effect to the repeated injunction of the courts to disturb the testator's disposition as little as possible, consistent with the requirements of the Act; did not give sufficient weight to the long-time absorption of Mr John Morgan into the new and apparently stable family established by his father; and did not adequately take into account the size of the estate remaining duty of the deceased to her son had properly been provided for. In the words of Priestley JA in Churton (at 257), had the estate in this case been larger, it would have been appropriate to make the provisions ordered by Hodgson J. However, especially after the costs of this litigation are deducted, the estate is not a large one. Provisions such as Hodgson J made would have extremely serious consequences for the appellant whose condition in life must be considered (as I infer the deceased testatrix did) by reference to his unemployable condition, his limited means of income and his settled ways in the family home which he had apparently occupied for most of his life. Having reached the foregoing opinion, it is necessary in my view, to set aside Hodgson J's orders. The orders to be substituted must be made "having regard to the circumstances at the time the order is made". See s7 of the Act. The Court does not have up to date affidavit material setting out the current position of the various claimants. It was informed by counsel for the appellant that, since the hearing at first instance Ms Tsivinsky, has discontinued a technical course at a tertiary institution and has married, although she apparently intends to return to 12 UNREPORTED JUDGMENTS the course. Presumably, Mr John Morgan remains at school. The respondents did not consent to the informal intimation to the Court of the facts concerning their current positions. Nor did they consent to the reading of an affidavit by which the solicitor for the appellant sought to itemise the costs incurred to date. Those costs will now be affected by the orders of this Court. In all the circumstances, whilst regretting the undesirable necessity in an estate of this size, of further proceedings in this litigation, there is no alternative to the requirement that affidavits be prepared by each of the parties bringing their evidence up to date. It may be possible to avoid a further oral hearing in this Court. But if any party requires it, to cross-examine deponents and to test their evidence, such a facility must be allowed. It would be possible for the parties, and their legal representatives, to save further expenditure of costs by achieving a proper settlement of their respective claims. For their guidance, and subject to the evidence to be adduced, I would consider that the proper orders under the Act would be of the order of $50,000 in favour of Ms Maria Tsivinsky and $25,000 in favour of Mr John Morgan. But these are provisional figures only. They might require reconsideration, in the light of the position emerging from the present condition of each of the competing relatives. A need for mediation to reduce costly divisive litigation I repeat my concern about the procedures which this litigation discloses. A mother leaves her entire estate to her only remaining child, a son, unemployable and an invalid pensioner. Expensive litigation is then initiated by grandchildren who, it must be conceded, had a particular relationship of closeness to and dependency upon their grandmother. It is at least possible that the grandmother weighed up the moral claims of her grandchildren and concluded that each of them was approaching adulthood and each, with their different supporters, could safely make their own way in life. Perhaps she reckoned that, her son living alone, childless and approaching fifty years of age would, in due course, make provision in his will for his only blood relatives, the grandchildren. Leaving property to one's blood relatives is, after all, not an uncommon feature of our society posited, as it is, upon an assumption (frequently fulfilled) that they will, in due course, make wills providing for the next generation. The language of the Act invoked in this litigation is expressed in terms of such generality that it is virtually impossible for professional advisers to be sure as to what orders, if any, will be made under the Act. The criteria of entitlement, of the factors warranting an application and of the considerations justifying an order under the Act are so vague and indeterminate that much depends upon the judicial reaction to each claim. Inescapably, that reaction will differ from one judicial officer to another. The importance which each attaches respectively to the testamentary right and to the reformatory facility for adjustment under the Act will influence the judicial response to particular claims for relief. The very uncertainty of the criteria to be applied effectively encourages applications. Often, there is little sanction about doing so because, at least if the person is eligible and there were some factors warranting the bringing of the application, the costs will be ordered to come out of the estate, frequently on a trustee or common fund basis. The result of the foregoing is that there are many encouragements, and few inhibitions, to claims being made under the Act. The only statutory inhibitions are to be found the procedure adopted for certain claims by s9(1) of the Act and in the reminder in s9(3) ("... if any") that proof of eligibility and factors warranting the bringing of a claim are not, of themselves, sufficient to ensure that an order will necessarily URJ TSIVINSKY v TSIVINSKY (Kirby P) 13 be made. The foregoing considerations provide words of warning against disturbing the necessarily evaluative and discretionary decisions of the primary judge. Such disturbance may encourage the prolongation of this form of litigation. To it there is rarely a single, indisputable answer. A statutory test framed in terms of what "ought to be done invites different response" from different decision-makers. But the same words of caution for appellate courts enjoin care on the part of primary decision-makers in disturbing the provisions of the will. Such care is not so much the product of respect for nineteenth century notions of property disposition. It is derived rather from a recognition that, in the solemn business of making a will which contemplates death and disposal of property, most individuals will seriously confront themselves with the "ought" question. They will generally do 80 with a much deeper perspective of the competing claims of their eligible partners and descendants than a court can gather even in the protracted litigation which tends to be a feature of this class of case. I have said in other cases that, where parties are bound together by blood or physical contiguity, such that they must continue in a relationship with each other after the court has closed its file, there are powerful arguments for mediation of their disputes. See eg Hemmes Hermitage Pty Limited v Abdurahman and Anor (1991) 22 NSWLR 343, 351 (CA). Claims under the Act are, for reasons which I have outlined, specially appropriate for such procedures. Look at the present case. According to the appellant, about $100,000 (and according to the respondents $65,000) of an estate of little more than $400,000 has been expended in legal costs. More costs are now in prospect. These facts portray a very high cost component for resolving the competing claims on the estate of the members of the deceased's family. There are now many such cases before the Court. A substantial cost component in estate distribution can be expected in the future deriving from applications under the Act unless some better means is found to resolve such claims. I do not pretend that every claim of this kind is susceptible to mediation. Perhaps in the present case settlement was ventured and failed. I realize that in some cases of this class, the motivations of parties run deep in family conflict. Sometimes applications are made under the Act out of a sense of disappointment, jealousy or grievance about perceived rejection. Yet, at least in some cases, there would be better ways to resolve the conflict than litigation with its established features of cost and delay. It is noteworthy that the Federal Parliament, in an analogous field, has provided f or amendments to the Family Law Act 1975 to facilitate mediation of family disputes over property. See Courts (Mediation and Arbitration Act 1991 (Cth). See also New South Wales Law Reform Commission, Training and Accreditation of Mediators LRC 67, September 1991, 16; J H Wade, "Lawyers and Mediators, What Each Needs to Learn From and About the Other" (1991) 2 Aust Dispute Res J 159. At least in retrospect, it is difficult to believe that a revolution of the present conflict in the Tsivinsky family, more favourable to the parties involved, could not have been achieved by procedures more suitable to, and efficient for, the resolution of their disputes. When their conflict is been as but one illustration of a burgeoning class of litigation with high costs in relatively modest estates, engendering deep and lasting animosities between family members, it is at least arguable that the procedural question raised should have the attention of Parliament if the criteria of the Act are to remain expressed in the present language of high generality and opacity. 14 UNREPORTED JUDGMENTS Preferred orders Upon the basis of the foregoing, the orders which I would favour are: 1. Appeal allowed; 2. Set aside the orders of Hodgson J dated 30 November 1989; 3. In lieu thereof order: (a) That within 28 days the parties file in this Court affidavits deposing to their own respective positions in life and financial assets, current income and expenditure; (b) That the appellant, as executor, cause an affidavit to be filed setting out the position reached in the distribution of the estate of the late Vera Vasilevna Tsivinsky, together with an affidavit of his solicitor setting out the costs of the several parties to these proceedings consequent upon the orders earlier made as agreed or taxed or if not agreed or taxed as claimed; (c) That within a further 28 days all parties have liberty to file written submissions as to the orders (if any) which the Court should now make under the Act in favour of the respondents; and 4. Stand-over to a date to be fixed by the Registrar the further hearing of the appeal; provided that if the parties and all of them signify to the Registrar their consent to the Court's determining the appeal upon the basis of the affidavits and written submissions, stand-over the further orders to be made disposing of the appeal. Securing an order of the Court After writing the above, I have had the benefit of reading the reasons for judgement of Mahoney JA and Priestley JA. Whilst I adhere to the view expressed in my reasons, the different conclusions to which members of the Court have come present difficulties for securing an order of the Court. In earlier times, this difficulty was resolved by the least senior Judge withdrawing his orders and agreeing in those of the Judge most senior. See Pennant Hills Restaurants Pty Limited v Barrell Insurances Pty Limited 1977 2 NSWLR 827, 866; O'Brien v Tanning Research Laboratories Inc (1988) 14 NSWLR 601, 641. However, as I have previously said, this is not a rational nor a satisfactory approach to the problem, depending as it does on the accidents of judicial seniority rather than on reason. It is more logical in this situation to find the Court's orders by the reasoning which reflects the highest common denominator of agreement in the Court. See Woolworths Limited v Kelly (1991) 22 NSWLR 189, 200 (CA). The majority of the Court is of the firm view that the orders of Hodgson J in favour of Ms Maria Tsivinsky should stand. That result should therefore be reflected in the order of this Court. I have considered whether I can agree with the orders proposed by Mahoney JA. However, I find that I cannot do so. If a discretionary order in favour of one grandchild (Mr John Morgan) can be set aside, in my opinion so may the order in favour of the other (Ms Maria Tsivinsky). I cannot, in a way satisfactory to myself, justify discrimination between them. As I have expressed in my reasons, I am very conscious of the cost of this litigation. Further expense confined to redetermining Mr John Norgan's entitlement would be most unfortunate in such a relatively small estate. A redetermined award for him could expose as unjust the award for his half-sister. Therefore, to secure an order of the Court and finality of this litigation, I am prepared to agree in the orders proposed by Priestley JA. If the estate had been larger, perhaps another result would have followed. URJ TSIVINSKY v TSIVINSKY (Mahoney JA) 15 If this appears an unsatisfactory result to the appeal, it is yet another example of the need to conserve the Court's disturbance of wills to circumstances in which the statute plainly applies. Opinions on its application can vary so greatly as the respective conclusions in this case demonstrate. The case also provides yet another reason for urging the provision of mediation in proceedings such as these. Mahoney JA The Court has before it for decision two applications. They are applications by the children of the daughter of the deceased. I shall refer to the applicants as "Maria" and "John". The facts are set forth in the judgment of Kirby P and I shall not repeat the detail of them. The deceased had had two children, a son Alexander and a daughter Anna, the mother of the applicants. The daughter Anna died in May 1986. In August 1986 the deceased, by her will, left the whole of her estate to her surviving child Alexander. She died in March 1987. The learned trial judge held that she had failed in her duty to Maria and to John: he awarded Maria $96,000 and John $48,000. Alexander has appealed to this Court against those orders. The submissions made to this Court canvassed the standing of Maria and John as "eligible persons" within the Family Provision Act 1982. It was submitted that orders could not or should not be made in favour of one or both of them. And the quantum of the orders made was contested. The submissions have raised for consideration the nature of the power given to the courts by the Family Provision Act and the extent to which, if at all, orders should be made in the present case. 1. The power given by the Family Provision Act 1982: By legislation of this kind, power has been given to the courts to (I shall refer to the present Act in New South Wales) "order that such provision be made out of the estate of the deceased person as, in the opinion of the Court ought, having regard to the circumstances at the time the order is made, to be made, for the maintenance, education or advancement in life of" the applicant. But that power is not plenary; it may not be exercised according to idiosyncratic notions or by reference only to the personal views of an individual judge or court. The statute and the principles established by the decisions provide parameters within which the power is to be exercised. The law as to family provision starts with the principle of our jurisprudence that a person is entitled to deal with her own property as she sees fit. This is basic and a well established part of our law: in this respect our law differs from systems derived from the Roman law. That basic principle was qualified in this State only in 1916, by the Testators Family Maintenance Act 1916. The Parliament gave to a judge a limited power to interfere with what a testatrix had done. The basis of that power lay in the view, first, that a testatrix might have a moral duty to make provision for the members of her immediate family; and, second, that that moral duty should be enforceable under the law, to the extent that "proper provision" had not been made: see generally Pontifical Society for the Propagation of the Faith v Scales 107 CLR 9 at 19; Churton v Christian (1988) 13 NSWLR 241 at 243-4. In order to warrant an order being made, an applicant must show three things: eligibility, duty, and need. These overlap but they are conceptually different and, in the present case, it is convenient to deal with them separately. (a) Eligibility: There was in this appeal considerable argument as to the function and the effect of, as I shall describe them, the eligibility provisions of the Family Provision Act. This Court has previously undertaken a textual analysis of the terms of the definition of "eligible person" in s6(1) and of the provisions of s9(1): see, eg, 16 UNREPORTED JUDGMENTS Churton v Christian; Ball v Newey (1988) 13 NSWLR 489; Benney v Jones (Court of Appeal, 18 June 1991, unreported); and it has examined the decisions of judges of the Equity Division in this regard: see, eg, re Fulop deceased (1987) 8 NSWLR 679; Churton v Christian at 252. It is not necessary to repeat what was said in those cases. However, in view of the terms of some of the submissions made in this appeal, it is proper to deal with the effect of the eligibility provisions in more general terms. (at page 38) In 1916, when the Parliament first authorised the courts to interfere with what a testatrix had done, it saw the persons eligible to seek such interference as limited to the members of the testatrix's immediate family. In the present sense, the eligible persons were, in the original Act, limited to "wife, husband or children": s3(1). The original enactment did not include grandchildren. What the 1982 Act did in this regard was to recognise an enlarged class of eligible persons or, more accurately, an enlarged class of persons who might be eligible persons. Presumably the Parliament took the view that, in 1982, the duty of a testatrix to make testamentary provisions for others could extend beyond her immediate family. It contemplated that the duty might extend not merely to a widow or widower, actual or de facto, a child, or a former wife or husband, but also to others. By s6(1) the class of potentially eligible persons was extended to include: "6(d). A person: (i) who was, at any particular time, wholly or partly dependent upon the deceased person; and (ii) who is a grandchild of the deceased person or was, at that particular time or at any other time, a member of a household of which the deceased person was a member." This extension has caused at least two difficulties: it has left unspecified what is the nature of the duty which the testatrix is to be seen as having to persons in this extended category and which the court is to have power to enforce; and it has created the possibility that the estate and so the legitimate beneficiaries may be subjected to claims of a kind which should not have been made. In Churton v Christian: at 243F; I referred to these difficulties. In order to determine whether a duty exists and the extent of it, it is necessary to understand the nature of the duty which the Parliament has determined should be enforced. One may readily identify the duty which a testatrix may owe to a member of her immediate family and the nature of that duty: see, eg, Kearns v Ellis (Court of Appeal, 15 December 1984, unreported) and Heyward v Fisher (Court of Appeal, 26 April 1985, unreported). But it is more difficult to identify the nature and, accordingly, the incidents of the duty which arises to a person whose relationship has been merely that of a sometime dependant, total or partial, and a sometime member of her household. The definition of these matters is something with which the legislature has no doubt intended that the courts are to deal. Perhaps because of the difficulty of determining what, under the 1982 Act, is an enforceable duty to this extended class of persons, the members of the Parliament saw fit to add to the provision as originally drafted a "sieving provision". This, I think, was the effect to be achieved by s9(1). Absent such a provision, the court might be required to hear the whole of an application by an applicant claiming to fall within para(d) (including issues as to competence, disentitlement and the like) when the proceeding could be disposed of merely by holding that the applicant had no such claim upon the testatrix as fell within the Act. The court was therefore empowered and, it may be, obliged to determine "first" whether an applicant within the extended category was owed a relevant duty by the testatrix. This no doubt was done to save cost. URJ TSIVINSKY v TSIVINSKY (Mahoney JA) 17 The procedure established by s9(1) has given rise to practical problems. These problems have been referred to in several cases: see, eg, Ball v Newey (1988) Appeal dismissed with costs. Counsel for the 1st Respondent: P Hallen Counsel for the 3rd Respondent: M Walton 10 Solicitors for the Appellant: Forbes-Smith and Co Solicitors for the 1st Respondent: Stacks Solicitors for the 3rd Respondent: Warren F Ball and Co